German Stocks Decline for Second Day; Volkswagen Falls

Volkswagen dropped 2.6 percent as a gauge of automotive-related companies was the worst performing industry group in the
Stoxx Europe 600 Index. Kabel Deutschland Holding AG (KD8) jumped to
its record price after Vodafone Group Plc approached the company
about a takeover.

The benchmark DAX Index (DAX) fell 0.3 percent to 8,199.02 at
10:35 a.m. in Frankfurt. The gauge rose 5.5 percent in May and
has rallied in all but one of the past 12 months as central
banks around the world maintained their stimulus efforts. The
broader HDAX Index lost 0.2 percent today.

“The big problem is that the markets have almost become
addicted to monetary stimulus,” Daniel Kukalj, an equity
analyst at Close Brothers Seydler Research in Frankfurt, wrote
in a note.

Bundesbank President Jens Weidmann and ECB Executive Board
member Joerg Asmussen testified on ECB’s Outright Monetary
Transactions at the Federal Constitutional Court in Karlsruhe in
hearings which continue today. While Weidmann argued that bond
markets exert discipline on countries’ finances, Asmussen said
the euro area faced break-up last year as investors began to
price in an end to the currency.

“The risk of doing nothing would have been greater,”
Asmussen told the court late yesterday. Weidmann, who voted
against the plan last year, told the hearing that ECB measures
may “blur the boundary between European monetary policy and the
fiscal policy of individual nation states.”